Phases in metered pricing in user-friendly way, points path to future LTE policies

Sprint had the idea first, but Verizon Wireless is making more song and dance about it - bundling a Wi-Fi iPad with a personal hotspot to lure customers from AT&T's 3G iPads, and to soften users up to the idea of metered data plans.

While operators argue fiercely about whether they will be able to sell tiered pricing to consumers for conventional phone deals, even with the promise of faster LTE speeds, most believe they can introduce new pricing structures with less traditional devices and services - hence the intense interest of Verizon, TeliaSonera, Sprint and other 4G pioneers in tablets, mobile routers and other emerging data-driven products.

Verizon's new offering integrates the iPad with the Novatel MiFi 2220 router, which shares a 3G (and in future LTE) connection between up to five Wi-Fi devices. This gives the carrier the chance to test out metered pricing, which it has always stated will be part of its 4G model, though it has not gone into detail. Its plan allows customers to pay for data by the gigabyte. The cheapest plan gives 1Gb for $20 a month with a $20 charge for every gigabyte of over-usage. Choosing 3Gb upfront costs $35 a month, and a 5Gb plan costs $50, while the price for each Gb of overuse on both these tariffs falls to $10.

This, in effect, meters the pricing of data between $10 and $20 per Gb, in contrast to unlimited smartphone plans or its mobile broadband tariffs for dongles and data devices, which rely on stringent caps and penalties. Although the iPad schemes are month-by-month, there is still an incentive to stay with Verizon - a customer buying the MiFi service and then using it to backhaul their own iPad would pay more for data ($40 a month for 250Mb or $60 for 5Gb, on Verizon's mobile broadband/MiFi deals).

The iPad/MiFi combination is clearly far better than the MiFi-only option, because users are not heavily penalized for over-enthusiastic usage (and presumably can also include other Wi-Fi devices in their plan). This may cause discontent among some of Verizon's existing base (the Verizon iPad can be added to existing MiFi plans, but at the old rates) but does indicate some creative pricing and attempts to draw in the growing band of people with new-style mobile gadgets like tablets.

"Nothing in the past has prevented people from using their MiFi 2200 with any Wi-Fi enabled device, including iPad," said Verizon spokeswoman Brenda Raney. "What is unique with this announcement is Verizon Wireless is embracing the combination and allowing customers to purchase the two devices at a bundle with great data pricing."

Clearwire and its MVNO Sprint have also been innovating in a similar way, with the advantage of a high capacity 4G network, nowhere near capacity as yet, to play with. Both push heavily on personal routers that share a WiMAX connection between Wi-Fi devices, rather than forcing users to purchase WiMAX PCs and phones - this step-by-step approach will be important for LTE too, before there is a wide choice of affordable LTE-specific gadgets.

AT&T charges less for the 3G/Wi-Fi iPad with its month-by-month, no-contract plan of $25 a month for 2Gb, but this is more per gigabyte than Verizon's 5Gb offer. This deal also involves paying $269.99 upfront for the MiFi, though that cost is zero if the purchase is made online with a two-year contract. The upfront cost of Verizon's iPad/MiFi bundle is about the same as AT&T's 3G iPad, though users will shell out an extra $129.99 for the Verizon combination compared to a Wi-Fi-only iPad from AT&T. Verizon does plan to sell the Wi-Fi tablet standlone too but has not revealed prices or plans yet.

Published: 18 October, 2010